What is Nexus?
Nexus represents the minimum legal connection required between a business and a state before that state can impose tax obligations on the business. Physical nexus traditionally required tangible presence like offices, employees, or inventory within state borders. By 2025, all states with a sales tax have adopted economic nexus laws, but their thresholds vary significantly. Some states require sales tax compliance at thresholds as low as $50,000 in annual sales or 100 transactions, while others use higher limits such as $100,000 in sales or 200 transactions. Understanding nexus rules is essential for multi-state businesses to ensure compliance while implementing Home office strategies and other tax planning approaches that may create unexpected state tax obligations when employees work remotely across different jurisdictions.
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